Letter To Congress: ACA Calls Competitive Carriers ‘Ignored’ Re: CAF

In a letter today to Sen. John Rockefeller IV (D-W.V.), chairman/Committee on Commerce, Science, and Transportation, and to Sen. Kay Bailey Hutchison (R-Texas), ACA President Matthew Polka says the Federal Communications Commission (FCC) is ignoring competitive providers when it comes to the agency’s Connect America Fund (CAF).

“The ACA agrees with the FCC’s overall objectives to achieve universal broadband deployment efficiently and effectively and drive the deployment of modern networks,” he wrote. “However, by largely ignoring the presence of competitive providers, who lead in providing broadband service, the Commission’s CAF will fall far short of achieving these goals. If it is to ensure that rural communities throughout the country receive broadband service comparable to that in urban areas, the Commission must avoid adopting the inefficient right of first refusal (or no-bid contract) proposal for price cap incumbent telephone companies. Instead, the Commission should rely on a competitive distribution process.”

Polka continued, “ACA’s membership includes more than 500 small and medium-sized providers that offer robust cable modem and VoIP telephone services to residential customers in smaller markets and rural areas without any government support…With continuing deployment of DOCSIS 3.0 broadband technology, these operators can deliver throughput speeds in rural areas that are at least 4X the Commission’s proposed speeds, which appear to be geared more towards the price cap companies’ DSL technologies. Because of their competencies and experience in deploying and offering broadband service, ACA’s members that offer cable modem service should have the opportunity to obtain funding from the CAF to build out broadband universally.”

Polka went on to note the ACA’s objections to the FCC’s proposal to provide billions of dollars over multiple years to larger price cap companies to deploy broadband in rural areas through a right of first refusal and instead believes CAF funding should be awarded through a competitive bidding process.

“However, in the interest of providing a way forward for the Commission, ACA and the National Cable & Telecommunications Association recently submitted a compromise proposal that provides the price cap companies with a right to receive a small amount of support for a short period to build out areas most in need of service right away,” he added. “This proposal will jumpstart the CAF program while ensuring the interests of rural communities and the American public are protected by having broadband deployed efficiently to as many rural communities as possible. Moreover, it will avoid, or at least limit, problems of waste and fraud that often result from sole-source contracts.”
 
ACA also put its concerns about the lack of fiscal responsibility in the FCC’s plan on the record. “To ensure accountability for the overall universal service program, the Commission should not rely merely on budgetary goals to keep the program from growing larger than $4.5 billion annually, which today results in a very burdensome 15% consumer fee,” Polka concluded. “Instead, to protect consumers, it must impose a hard and durable cap.”

In a conference call this afternoon, ACA’s Polka reiterated that his group wants to see the FCC pass some sort of Universal Service reform this year, but he wants a level playing field when it comes to financing. ACA member John Higginbotham, superintendent, Cable/Telecommunications at muni Frankfort Plant Board in Kentucky, pointed out that he would like to offer broadband services to some 1,700 households in his town that have no access but, because of their really remote-rural status (between 10 and 14 miles from the headend), costs are prohibitive. The incumbent telco has rights of first refusal to serve these households, but has not done so.

"I just want a level playing field to get access to the funds," he said.

Chris Hilliard, CEO at USA communications, which serves areas in Nebraska, Colorado, Montana and southern California, built out his rural network with no federal funding. However, there are areas he still want to reach, particularly near San Diego.

"I can build out a heck of a lot cheaper than AT&T can but, by our calculations (regarding the FCC’s ABC Plan), we are left out of the game," he lamented.

ACA took a contingent of members to visit the FCC last week to discuss Universal Service Fund reform, and they will be visiting Washington, D.C., again sometime during the next few days to plead their cases again. No one has seen the draft USF reform language now being considered by commissioners, but those on the call this afternoon agree that the agency is leaning toward favoring telcos over competitive carriers when it comes to rights of first refusal. For more information on this, click here

– Debra Baker